Enelamah: It’s Now Easier to Access Credit

Okechukwu Enelamah
Okechukwu Enelamah

The Minister of Industry, Trade and Investment, Mr. Okechukwu Enelamah, in this interview on Arise TV, a sister broadcast station of THISDAY, insisted that the federal government has developed lots of policies to enables businesses to thrive. He also spoke about plan by the government to create industrial parks in the six geo-political zones and ultimately in all the states in the country. Nosa Alekhuogie presents the excerpts:

Nigeria’s ranking on the World Bank Ease of Doing Business Index, the country fell by one place last year. What accounted for this drop in the 2018?

The starting point is to acknowledge that the whole theme of enabling environment and making it easier to do business in our country is one that we should have paid attention to a long time ago. Before this government came in, for 10 years or so, we kept dropping in the ranking. We were in the top 100 in 2006 or so, but from 2006-2015, we had dropped to 169th/ 170th. But we as a government, we made it a priority that, that reversal has to stop and we have to move forward. To the credit of President Muhammadu Buhari, he commissioned a council, the Presidential Enabling Business Environment Council, to oversee all the efforts of government working with the private sector and other stakeholders to make it easier to do business in our country. One indicator of success is what the World Bank measures – the so called World Bank Ease of Doing Business Index. We are quite gratified and happy that the first year of our efforts resulted in a very significant job. Like you said, 24 places and as you know, when you have such rapid gains, you need to consolidate these gains and then move forward. I am fully persuaded that the forward movement would continue. For some reason last year, a lot of the improvements we were making were not recognised by the World Bank because they felt they have not been bedded down. I think the most important message is that this is a joint effort and everybody benefits if it’s easier to do business in Nigeria. So the private sector, the government, small businesses which by the way is what the measurement of the World Bank Index focuses on.

With your capacity as the Minister of Industry, Trade and Investment, you are also the Vice Chairman of the Presidential Enabling Business Environment Council, what would you say are the major accomplishments of the Council?

Well the major accomplishment of the council can be divided into a number of parts. One is just to make doing business in our country easier. Let’s start with what the World Bank measures. They measure the life cycle of a typical small business, from how it obtains registration. It is now easy to register businesses within 24 hours by the Corporate Affairs Commission. We have automated the way businesses pay their taxes, we have made it a lot easier to obtain credit, the National Assembly passed two notable laws that make it easier for small businesses to obtain credit, all in the life of this administration. We are working with the states to make it easier to obtain and register property. So all the things that are required to make it easier for businesses to run, we have done. So, that’s one dimension of what the World Bank measures. We are also working on the things that affect the way people do business in the country, particularly investors coming in. I’m sure you have heard of basic services like visa-on -arrival and trying to ensure that somebody wanting to get a visa when coming to Nigeria can get it within 48 hours, our missions would issue such a visa to such person. These things look ordinary, but they are the things other countries have done and we are now doing to make our country attractive. If you remember, the President and the acting President at the time passed an Executive Order 001 on transparency, the principle of one government and also making it easier to do business in the country. All those are geared towards making it easier to do business in the country and you would find out that things would get better. As we go on, you would discover that things would get progressively easier. The important thing is we have to continue to make it a priority.

The Council set out seven priorities to target, out of which four are yet to be met. They include registration of property, getting credit, power supply. How do you intend to grow businesses if you cannot meet the expectations of the investment and prospective businesses cannot be guaranteed power supply and even access to cheap credit?

So, let’s just used the examples you used. In all those examples, there has been positive movements. If you look at getting credit, I told you that two laws have been passed that makes it easier to get credit. The Bank of Industry has been providing credit, we also have the social intervention funds for the artisans and people in the informal sector. So, I think in terms of getting credit, a lot has been done. On the issue of property, the key is making it easier to register property at the state level and we are working with the states in that regard and that’s one of the priorities of the presidential enabling business environment council right now.

But the two laws have not been effective. They have been passed, but what about the implementation?

There are two sides to the laws. One has to do with having a credit registry that enables people have a credit track record and if you look at that collateral and credit registry, what you would find is that a lot of people and businesses have registered, we have about 600,000 if not more that had been registered. So, obviously, the credit history would develop over time. If you look at the movable collateral law which says you can obtain credit using movable property and not just landed property, I think importantly, we are making it easier to access credit for SMEs. It wouldn’t all happen in one swoop. My view is that there is a lot going on.
We were at the presidential quarterly business forum and the Bank of Industry pointed out they have given out over N500 billion worth of credit over the last three years. A significant part of that went to SMEs. I do believe there is positive improvement.

There is also the issue of land matters. Beyond Lagos and the Federal Capital Territory which have digitised their land registrations, other states continue to face a plethora of bottlenecks in land registration and allocation. What has your ministry done to reach to the states to encourage them to improve the process of land acquisition and registration?

Well the way to go is to leverage technology. What happens in Nigeria is that, as you have those improvements, other states copy. I think you would see increasingly that other states have followed suit. So far, the secretariat has been to many of the states in the country and making it easier to do business at the state level and automation being a big part of that.

What about access to right of way. This is another area prospective investors in the telecommunications sector have complained about. They have found it increasingly difficult to roll out their fibre cables along Lagos and Abuja?

A lot of work is going on in this area. One of the other important initiative that the president launched is the Nigeria industrial policy and competiveness advisory council which is basically a partnership between senior members of the government and the private sector working together to further industrialisation in the country. One dimension of that work is critical infrastructure. In dealing with the critical infrastructure, we dealt with the issue of right of way particularly for people who provide broadband access and other telecom services that require right of way. We have engaged the state and the good news is that the state through six representatives from the six geopolitical zones have committed to work with us to harmonise and make it easier to get right of way so that there would be a basic fee to pay across the country in every state states and also to ensure that that right of way is made increasingly easier. In return, the telecoms companies have committed to aggressively deploy technology across all the states and improve broadband and data access. So, I think it’s a win-win and you would see that being rolled out in 2019.

Are you in agreement with the sub- national report from the 36 states that has called for a proactive approach whereby state government implements federal reforms initiatives in centrally regulated areas but would also design and implement their own reforms in areas under state authority?

The short answer is yes. But these things don’t happen automatically and they don’t happen by just issuing a directive or some kind of law. What happens is what the industrial policy and competitiveness advisory council is doing which is where you have a group of people particularly when it’s a partnership between the government and private sector engaging the states, federal government and working together in harmony and collaboration to basically produce results that are win- win for the states, the federal government and the stakeholders. This thing should not stop the states from continuing with their own reforms at the state levels. The fact that there are certain reforms that could cut across the entire country and therefore we should work collaboratively with the states and not stop individual states from continuing to pursue reforms and progressive interventions that would make business work better in their states and life better for their citizens.

After rising in 2017, and in the first quarter of 2018, capital importation into the country including foreign investment fell in the two succeeding quarters of last year. Isn’t this a sign of loss of confidence in the economy among foreign investors?

I don’t think so. First let me say we have done a lot particularly working with the Nigerian Investment Promotion Commission to make it more attractive for investors to come in. Let’s start with what we have done for existing investors which is very important. There were two areas that they wanted to see interventions which the government has done the work. One is the Pioneer Status Incentive Scheme. That is, as they are investing, they want to be given tax holidays for that, as you know, was suspended before we came in. But it has been revamped, restored and streamlined and is working very well. The second one was the Export Expansion Grant for those that want to export and grow their businesses beyond the Nigerian market. We have also restored that. We then come to the point of new investors, that is foreign direct investors (FDIs), foreign portfolio investors (FPIs) and domestic investors. One of the important measures of that is the commitment they make. If you look at commitments investors made in 2017, it was over $60 billion in announced investments. In 2018, it jumped to over to $70 billion. Now, depending on the nature of the investment, it may not always come in as quickly as you like. You need to monitor particularly when it comes to FDI, the commitments and the work people are doing before you eventually get to the actual flows which may eventually happen overtime which is what wise investors do. Finally, we also know that investors do get circumspect when elections are approaching, so it’s not necessarily unusual for you to see some kind of slowdown just before an election and upswing after the election. So what we encourage investors to do is to see the track record of Nigeria in terms of conducting elections.

After Nigeria pulled out of signing the African Continental Free Trade Area (AfCFTA) agreement, it set up a committee to review the potential cause and the impact of that agreement. What were the findings of the committee and is the federal government still adamant about remaining out of the continental trade deal?

First off all, Nigeria did not pull out. We were very involved in the work that led up to the signing of the agreement by some of the members in March 2018. The way it was set up, if you follow the story AfCFTA, the African summit which is the heads of government and heads of states of African Union basically agreed that this was a good thing to do and that they would sign a framework to kick off the process. Now, in the case of Nigeria, some of our stakeholders pointed out that they wanted to be more involved in the process prior to the rectification beyond what will happen after the rectification. The way the AfCFTA was set up is that you are going to have one year following the ratification by the heads of government for you to go and consult locally. With the benefit of hindsight, Nigeria actually did it the right way. So, we decided to do it the other way. It’s not a one off opportunity where if you don’t sign as at march/ April 2018, you can’t sign the agreement. The agreement is going to be a 50-100 year agreement just like the European Union agreement. It is going to last for a very long time. Given the level of interest and engagement of the Nigerian private sector, of the Nigerian state governors and a number of other players, we decided to pause, engage them, explain the agreement, understand it, do some impact studies and eventually proceed on basis of that and I believe that the work which is now coming to a successful conclusion would lead to Nigeria going ahead to support the agreement. But then, we have stakeholders which haven’t been carried along. This is a case where we decided to slow things down so that we would have more buy-in. I believe the benefits would show in the fullness of time.

Are you saying the committee has not completed its work, when can Nigerians hope it would eventually complete its work?

That work is going to be completed I believe this month. The president gave us three months. I’m a co- chair of the committee doing the impact assessment studies and from the feedback I have, that work is going to be completed imminently. Then that report would be passed to the president and I believe he would on the basis of that, advise us and direct us on how to make sure that Nigeria gets the full benefits of the AfCFTA which as you know haven’t been signed by a majority of African countries and is now waiting for ratification by 22 of those countries to go into effect. So, what we are talking about is how to work within an AfCFTA environment and I believe Nigeria would be well prepared when that eventually happens.

The committee was set up in October last year, how much longer can the Nigerian Government hold out from joining the continental trade deal?
It’s not usually how fast but how well. The way to look at what Nigeria is doing is that Nigeria is trying to do the AfCFTA agreement engagement well as opposed to doing it fast and that’s a choice. We made the choice to do it well, not necessarily to be the first. The second point to make is that these set of studies and engagement we are doing now is what would bring the benefits which are not automatic in terms of the size of market it would create, the infrastructure, people have to do that and usually it’s done in partnership between business and government. So the benefits of this engagement is that we can work out strategies on how we would engage as a country and as you pointed out, we are the biggest player in the continent. Therefore, Nigeria doing it well can only benefit not just Nigeria, but the entire continent. I am highly confident that having gone through a proper process to engage on the AfCFTA, the results wound bring many benefits to Nigeria. But it would be because we went through this process.

You have commenced the revitalisation of the textile industry in conjunction with China with plans to open factories in Katsina, Kano, Abia and Lagos. How long will this process take?

We are doing a lot to revamp our industries where Nigeria historically had a comparative and competitive advantage and textile, garment, being examples. So what we are doing is creating the industrial infrastructure which is what led to the sector basically becoming moribund. We plan to do it in all the six geo-political zones and ultimately in all the states. But Kano, Katsina, Lagos, Abia states are examples of where we are hoping that as we revamp the industrial parks and the special economic zones there, what you would then have is that investors would come in and by investing, we would have this textile sector coming back in a very big , robust and much more competitive way. We are doing this in partnership with the private sector like the Real Group from South Africa and Vlisco, which is a group that is also looking to come and invest in a significant way in the cotton, textile and garment sectors and there are also many players looking at it. This is a model we intend to adopt across board. We want to do the same thing for agric processing, petrochemical and downstream, auto sector and all the other sectors where we have the raw materials and process them here rather than exporting raw materials and importing finished goods. The real group is bringing in $2 billion into the country. That’s some kind of positivity.